If anything, restrictions on hedge fund investments should be reduced. Like any other investment, it is the broker's duty to ensure that their clients are investing properly.

Also, there are several types of hedge funds that should be exempted from investment restrictions:

1-Funds of Hedge Funds: these investments usually conduct extensive due diligence and offer diversification such that investors are highly unlikely to experience major investment losses. Evidence suggests that these are not particularly risky investments.

2-Pre-screened hedge funds such as those offered by the Citigroup Alternative Investment Hedge Forum. The hedge funds available for purchase have been vetted with extensive due diligence and generally offer superior liquidity.

At a minimum, registered hedge funds should be subject to less restrictive investment limitations than non-registered products.